Delev & Associates, LLC

Can I still receive payments if a debtor files for bankruptcy?

It can be very frustrating when a creditor receives notice that a debtor has filed for bankruptcy protection. This is because it could mean that a business or individual will not be able to receive the remaining amount of money owed to them. However, there are ways that creditors can improve their chances of getting paid at least a portion of what is owed.

According to this article on, bankruptcy is not necessarily the end of a financial relationship between creditors and debtors. While communication with a debtor must cease once bankruptcy is filed, there are still steps that creditors can take to try and protect themselves financially.

Essentially, there are few things that can and should be done if a debtor files for bankruptcy.

  1. Get educated on the situation: Creditors should determine what type of bankruptcy has been filed. If it is Chapter 11, it will be possible to develop an adequate repayment plan with the debtor. If it is Chapter 7, the debt may be discharged and a creditor could end up not getting paid.
  2. Take action: It will be essential to file a claim stating what the debtor owes. Without a claim, a person cannot collect money. Creditors should also be sure to attend the 341 meeting with the debtor. This meeting is an opportunity for a creditor to scrutinize proposed debt repayment plans and make determinations on whether they are acceptable or not.
  3. Weigh the options: Once you have all the facts and have taken steps to pursue repayment, it is necessary to consider what the best course of action may be. In some cases, the debt amount is relatively small or the chances of receiving meaningful payments are small. In these cases, it may be wise to suffer the loss. In other cases, there is good reason for creditors to use all available resources to pursue repayment.

Bankruptcy can certainly complicate matters for creditors, as it could mean that debts will go unpaid or that only a small portion of them will be paid back. However, this doesn't mean that creditors shouldn't consider all their options to pursue money owed.

Working with an attorney familiar with consumer collection practices and bankruptcy can be a good idea for any individual or business who is up against a delinquent creditor and the possibility that he or she will file for bankruptcy protection.

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